Correlation Between First Trust and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both First Trust and Eaton Vance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Trust and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust New and Eaton Vance National, you can compare the effects of market volatilities on First Trust and Eaton Vance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Trust with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Eaton Vance.
Diversification Opportunities for First Trust and Eaton Vance
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Eaton is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Trust New and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National and First Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Trust New are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance National has no effect on the direction of First Trust i.e., First Trust and Eaton Vance go up and down completely randomly.
Pair Corralation between First Trust and Eaton Vance
Considering the 90-day investment horizon First Trust New is expected to generate 1.4 times more return on investment than Eaton Vance. However, First Trust is 1.4 times more volatile than Eaton Vance National. It trades about 0.06 of its potential returns per unit of risk. Eaton Vance National is currently generating about 0.03 per unit of risk. If you would invest 581.00 in First Trust New on September 26, 2024 and sell it today you would earn a total of 57.00 from holding First Trust New or generate 9.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 27.82% |
Values | Daily Returns |
First Trust New vs. Eaton Vance National
Performance |
Timeline |
First Trust New |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eaton Vance National |
First Trust and Eaton Vance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Eaton Vance
The main advantage of trading using opposite First Trust and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Eaton Vance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eaton Vance will offset losses from the drop in Eaton Vance's long position.First Trust vs. Voya Global Equity | First Trust vs. Blackrock Enhanced Capital | First Trust vs. Eagle Point Income | First Trust vs. European Equity Closed |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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